Ifc cdi-english

Acquisition ofCanadian Direct

February 10, 2015

Insurance (CDI)

Intact Financial Corporation (TSX: IFC)

2IFC acquisition of CDI

Forward-looking statements

Certain of the statements included in this presentation about the Company’s current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely”, “potential” or the negative or other variations of these words or other similar or comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by management based on management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Many factors could cause the Company’s actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors: the Company’s ability to implement its strategy or operate its business as management currently expects; its ability to accurately assess the risks associated with the insurance policies that the Company writes; unfavourable capital market developments or other factors which may affect the Company’s investments and funding obligations under its pension plans; the cyclical nature of the P&C insurance industry; management’s ability to accurately predict future claims frequency; government regulations designed to protect policyholders and creditors rather than investors; litigation and regulatory actions; periodic negative publicity regarding the insurance industry; intense competition; the Company’s reliance on brokers and third parties to sell its products to clients; the Company’s ability to successfully pursue its acquisition strategy; the terms and conditions of, and regulatory approvals relating to the proposed acquisition described herein; timing for completion of the proposed acquisition; synergies arising from the proposed acquisition; management’s estimates and expectations in relation to resulting accretion, net operating income per share, IRR, annual synergies and MCT; the Company’s ability to execute its business strategy; the Company’s participation in the Facility Association (a mandatory pooling arrangement among all industry participants) and similar mandated risk-sharing pools; terrorist attacks and ensuing events; the occurrence of catastrophic events; the Company’s ability to maintain its financial strength and issuer credit ratings; access to debt financing and the Company's ability to compete for large commercial business; the Company’s ability to alleviate risk through reinsurance; the Company’s ability to successfully manage credit risk (including credit risk related to the financial health of reinsurers); the Company’s reliance on information technology and telecommunications systems; the Company’s dependence on key employees; changes in laws or regulations; general economic, financial and political conditions; the Company’s dependence on the results of operations of its subsidiaries; the volatility of the stock market and other factors affecting the Company’s share price; and future sales of a substantial number of its common shares.

All of the forward-looking statements included in this presentation are qualified by these cautionary statements and those made in Section 12 - Risk management of our MD&A for the year ended December 31, 2014, hereafter. These factors are not intended to represent a complete list of the factors that could affect the Company. These factors should, however, be considered carefully. Although the forward-looking statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. When relying on forward-looking statements to make decisions, investors should ensure the following information is carefully considered. Undue reliance should not be placed on forward-looking statements made herein. The Company and management have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


Disclaimer

No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its the directors, officers or employees as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and no responsibility or liability is accepted by any person for such information or opinions. In furnishing this Presentation, the Company does not undertake or agree to correct any inaccuracies in, or omissions from, this Presentation that may become apparent. The information and opinions contained in this Presentation are provided as at the date of this Presentation.

The Company uses both International Financial Reporting Standards (“IFRS”) and certain non-IFRS measures to assess performance. Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are unlikely to be comparable to any similar measures presented by other companies. Management of the Company analyzes performance based on underwriting ratios such as combined, general expenses and claims ratios as well as other performance measures such as return on equity (“ROE”) and operating return on equity. These measures and other insurance related terms are defined in the Company’s glossary available on the Intact Financial Corporation web site at www.intactfc.com in the “Investor Relations” section. Additional information about the Company, including the Annual Information Form, may be found online on SEDAR at www.sedar.com.


Expanding our direct offerAddition of CDI extends direct operations from coast to coast

Strong strategic fit

Financial position remains strong

• Broadens direct presence for IFC

• Facilitates objective to double direct capabilities

• Track record of strong underwriting results

Financially compelling• IRR estimated above 15%1

• Immediately accretive to NOIPS2

• Acquisition to be financed through excess capital

• Estimated MCT on closing above 200%

1 Internal rate of return. Based on IFC’s target capital structure of 20% debt/80% equity.2 Net operating income per share. Excluding non-recurring restructuring costs.


Strong financials; diversifying mixAcquisition of CDI adds meaningful presence in Western Canada

2014 CDI Direct Premiums Written

67%

31%

2%

54%46%

Personal Property

Personal Auto

AlbertaBritish Columbia

By Line of Business By Geography

51%

26%

8%

8%7%

Ontario

Quebec

Alberta

Atlantic

B.C.

59%30%

9%

2%

Ontario

Quebec

Atlantic

Alberta

2014 IFC Direct Channel: $975M DPW*

2014* 5-yr CAGR

Direct premiums written $143M 4.2%

2014* 5-yr avg

Combined ratio 94.7% 94.4%

Return on equity 13.0% 14.4%

Track record of strong financial performance

* For the 12 months ended October 31, 2014

Liability

Pro forma CDI: $1.1B DPW*

* Includes Anthony Insurance and InnovAssur


Acquisition metrics

Purchase Price $197 million cash consideration1

Transaction EconomicsEstimated IRR above 15%5

Accretive to NOIPS by 2% in the near term6

Regulatory Capital Impact Estimated MCT on closing above 200%

Expected Closing Date Mid-2015

Approvals Customary regulatory approvals

Financing IFC Excess Capital $170M | CDI Excess Capital $27M7

Purchase Metrics P/BV2 = 2.5x | P/E3 = 19x | P/E4 = 10x (including synergies)

Key Components Personal Auto and Home | Alberta and B.C.

1 Excludes transaction costs.2 Price to book value. Based on October 31, 2014 book value.3 Price to 2014 earnings (12 months ended October 31, 2014). 4 Reflects expected annual after-tax synergies of $10 million.5 Internal rate of return. Based on IFC’s target capital structure of 20% debt/80% equity.6 Excluding non-recurring restructuring costs.7 Represents a portion of CDI’s capital in excess of 200% MCT as at October 31, 2014.

Capital position expected to remain strong following acquisition


Streamlining our brandsAdding CDI, while rebranding Grey Power to belairdirect

Broker Channel

� Growth and innovation will be accelerated in 2015:

� Increase investments in advertising, technology and

product development

� Launch a new 50+ product for brokers and their customers

Direct Channel

� Grey Power will be rebranded as belairdirect and the two

operations will be united

� Customers of Grey Power and belairdirect will begin to

benefit from new product and service offerings as a result

of sharing between the two companies

� CDI brand well-regarded in Western Canada

DPW = $6.4 billion

DPW = $0.7 billionDPW = $0.7 billion

CDI

DPW = $143M

DPW = $662M

DPW = $185MDPW = $6.4 billion


Conclusion

� Strong strategic fit� Extends our direct presence from coast to coast

� Experienced local team with strong track record of performance

� Facilitates objective to double our direct capabilities

� Financially compelling� Estimated internal rate of return above 15%

� Immediately accretive to NOIPS, and by 2% in the near term

� Strong financial position maintained� Attractive deployment of our excess capital

� Estimated MCT on closing above 200%

� Streamlining our brands� Expanding and simplifying our direct operations, while improving

our ability to respond to evolving customer expectations

Contact Us

Dennis Westfall, CFAVice President, Investor Relations

Maida Sit, CFADirector, Investor Relations

http://www.intactfc.comClick on “Investor Relations” tab

[email protected]

416.941.53361.866.778.0774 (toll-free)

[email protected]

416.341.1464 ext 45153

[email protected]

416.344.8004

Investor Relations

General Info